Question: Varner Inc. and King Inc. have the following operating data: Varner Inc. King Inc. Sales $260,500 $834,000 Variable costs 104,500 500,400 Contribution margin $156,000 $333,600

Varner Inc. and King Inc. have the following operating data: Varner Inc. King Inc.

Sales $260,500 $834,000

Variable costs 104,500 500,400

Contribution margin $156,000 $333,600

Fixed costs 104,000 194,600

Income from operations $52,000 $139,000

a. Compute the operating leverage for Varner Inc. and King Inc. If required, round to one decimal place. Varner Inc. King Inc.

b. How much would income from operations increase for each company if the sales of each increased by 10%? If required, round answers to nearest whole number.

Dollars Percentage

Varner Inc. $ %

King Inc. $ %

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